American Axle & Manufacturing Announces Record Third Quarter
Earnings of $0.71 Per Share Net debt to capital reduced to 38.6%
DETROIT, Oct. 30 /PRNewswire-FirstCall/ -- American Axle &
Manufacturing Holdings, Inc. (AAM), which is traded as AXL on the
NYSE, today reported financial results for the third quarter of
2003. Third Quarter 2003 highlights: * Record third quarter diluted
earnings per share of $0.71 * Record third quarter net sales of
$868 million, up nearly 5% versus the third quarter of 2002 *
Non-GM sales growth of 13%, representing 19% of total net sales
versus the third quarter of 2002 * Positive free cash flow of $70
million * Reduced net debt to capital ratio to 38.6% from 50.7% at
year end 2002 * After-tax return on invested capital of 15.4% on a
trailing twelve month basis AAM's third quarter diluted earnings
per share increased to a record $0.71 per share from the $0.70 per
share earned in the third quarter of 2002. Net income for the
quarter was $38.7 million, an increase of 6% when compared to the
$36.5 million reported in the third quarter of 2002. "AAM continued
its strong financial performance by achieving record third quarter
results. Our performance for the quarter was again driven by
increases in content per vehicle through our ability to provide
new, advanced product technology to our customers and our
relentless focus on productivity and cost reduction," said American
Axle & Manufacturing Co-Founder, Chairman of the Board &
CEO Richard E. Dauch. "AAM is a company committed to growing
profitably and meeting its financial targets. We are pleased that
this performance allowed us to achieve one of our key financial
targets three months early, reducing our net debt to capital ratio
below 40% to 38.6%." Net sales rose to a third quarter record of
$867.7 million, an increase of nearly 5% from $828.7 million in
sales in the third quarter of 2002. This compares to a decrease of
5% in North American light vehicle production and a 2% increase in
General Motors light truck production for the quarter compared to
the same period in 2002. AAM sales were aided by a 3% increase in
AAM content per vehicle to $1,174 for the third quarter of 2003 as
compared to the third quarter of 2002. Sales continue to be
positively impacted by the successful Fall 2002 launch of the
heavy-duty Dodge Ram program and the increased production of GM's
Full-size pickup/SUV programs and negatively impacted by the
decrease in production of the Astro/Safari program by GM during the
quarter. For the nine months ended September 30, 2003, sales were
$2.76 billion, representing a 7% increase from the $2.57 billion
generated in the nine months ended September 30, 2002. Sales to
non-GM customers continue to grow, increasing 13% to $167.2 million
in the third quarter of 2003 and increasing 49% to $502.0 million
for the nine months ended September 30, 2003. Sales to non-GM
customers now represent approximately 19% of total sales for the
quarter ended September 30, 2003, and 18% of total sales through
the nine months ended September 30, 2003. Gross margin was 13.8%
compared to 13.6% gross margin reported in the third quarter of
2002. Operating income was $69.7 million or 8.0% of sales in the
third quarter of 2003, as compared to $68.7 million or 8.3% of
sales for the third quarter of 2002. The results for the quarter
include a $3.4 million charge associated with salaried workforce
adjustments to meet current business conditions and $2.1 million of
costs incurred related to the power outage on August 14, 2003
primarily affecting AAM's Detroit operating facilities. For the
nine months ended September 30, 2003, gross margin was 14.6% versus
14.1% for the nine months ended September 30, 2002. Operating
income grew 11.7% in the nine months ended September 30, 2003 to
$254.8 million or 9.2% of sales versus $228.2 million or 8.9% of
sales for the nine months ended September 30, 2002. Net income grew
16.0% to $143.7 million for the same period. Capital spending for
the nine months ended September 30, 2003 was $172.9 million. As a
result of this normalized level of capital spending and $326.0
million in cash flow provided by operating activities, net cash
flow after capital expenditures was $153.1 million for the nine
months ended September 30, 2003. For the nine months ended
September 30, 2003, research and development (R&D) spending
rose approximately 14% to $46.0 million versus $40.4 million for
the same period of 2002. The increase is consistent with the
company's focus on the development of future products targeted at
growth segments of the market. As a result of this R&D
commitment, AAM generated over 80% of its sales from new products
introduced to the market since mid-1998 as compared to 76% for the
nine months ended September 30, 2002. "We plan on continuing our
strong financial performance to the end of the year, with continued
reductions in debt and the generation of at least $200 million in
positive free cash flow for the year. Our earnings guidance of
$3.65 diluted earnings per share for the full year 2003 remains
unchanged," said Robin J. Adams, AAM's Executive Vice President -
Finance & Chief Financial Officer. Recent Developments On
August 12, 2003, AAM announced the production launch of the
driveline system for Chevrolet's all-new SSR (Super Sport
Roadster). The Chevy SSR, the world's first retractable-roof sport
truck, features AAM's rear axle system with AAM's PowerLite(R)
aluminum carrier and PowerDense(TM) hypoid and net shaped
differential gears, multi-link rear suspension design and a helical
gear limited slip differential. On September 15, 2003, AAM adopted
a Stockholder Rights Plan (Rights Plan). The adoption of the Rights
Plan provides protection against coercive or unfair takeover
tactics and encourages anyone seeking to acquire the Company to
negotiate with the Board of Directors first. The Rights Plan is
similar to plans adopted by many public companies and other
automotive supply companies. On October 3, 2003, AAM announced the
pricing of a Secondary Offering by Blackstone Capital Partners II
Banking Fund L.P. and its affiliates (Blackstone). Under this
offering, Blackstone sold 7,000,000 shares of common stock to
Morgan Stanley. Morgan Stanley was also granted an option to
purchase an additional 500,000 shares to cover over-allotments,
which was exercised. On October 17, 2003, AAM announced that an
expansion of its Technical Center in Rochester Hills, MI is nearing
completion. The expansion will incorporate a state-of-the-art Road
Load Simulator, which will be used to test and validate chassis and
module assemblies and components. The expanded Technical Center
will also provide both increased capability for future product
requirements as well as a 25 percent increase in testing capacity
on AAM's critical axle dynamometers. On October 22, 2003, AAM
announced that it recently launched production of front and rear
axles for the 2004 Chevrolet Colorado and GMC Canyon. The vehicles
incorporate newly designed front axles and AAM's state-of-the-art
rear axle design. Both systems feature PowerLite(R) aluminum
housings and PowerDense(TM) gear technology. On October 23, 2003,
AAM announced that it had secured a new driveline systems contract,
new transmission components business, and its first ever production
intent contract for its SmartBar(TM) technology. These programs
will generate approximately $40 million in revenue annually when in
full production. Non-GAAP Financial Information In addition to the
results reported in accordance with accounting principles generally
accepted in the United States (GAAP) included within this press
release, AAM has provided certain information, which are considered
non- GAAP financial measures. Such information is reconciled to its
closest GAAP measure in accordance with SEC Rules and is included
in the attached supplemental data. Management believes that these
non-GAAP financial measures are useful to both management and its
stockholders in their analysis of the company's business and
operating performance. Management also uses this information for
operational planning and decision-making purposes. Non-GAAP
financial measures should not be considered a substitute for any
GAAP measure. Additionally, non-GAAP financial measures as
presented by AAM may not be comparable to similarly titled measures
reported by other companies. AAM is a world leader in the
manufacture, engineering, design and validation of driveline
systems and related components and modules, chassis systems and
forged products for light trucks, sport utility vehicles and
passenger cars. In addition to its 14 locations in the United
States (in Michigan, New York and Ohio), AAM also has offices and
facilities in Brazil, England, Germany, Japan, Mexico and Scotland.
Certain statements contained in this press release which are not
historical facts contain forward-looking information with respect
to the company's plans, projections or future performance, the
occurrence of which involve risks and uncertainties that could
cause the company's actual results or plans to differ materially
from those expected by the company which include risk factors
described in the company's filings with the Securities and Exchange
Commission. For more information: Media relations contact: Investor
relations contact: Carrie L.P. Gray Richard F. (Rick) Dauch
Director, Corporate Relations Vice President, Investor Relations
(313) 758-4880 (313) 758-4767 Or visit the AAM website at
http://www.aam.com/ AMERICAN AXLE & MANUFACTURING HOLDINGS,
INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three
months ended Nine months ended September 30, September 30,
------------------ ----------------- 2003 2002 2003 2002 ------
------ -------- -------- (In millions, except per share data) Net
sales $867.7 $828.7 $2,756.6 $2,569.2 Cost of goods sold 748.3
716.4 2,354.7 2,206.7 ------ ------ -------- -------- Gross profit
119.4 112.3 401.9 362.5 Selling, general and administrative
expenses 49.7 43.6 147.1 134.3 ------ ------ -------- --------
Operating income 69.7 68.7 254.8 228.2 Net interest expense (11.2)
(13.2) (35.7) (37.0) Other income, net 1.0 1.6 1.9 2.4 ------
------ -------- -------- Income before income taxes 59.5 57.1 221.0
193.6 Income taxes 20.8 20.6 77.3 69.7 ------ ------ --------
-------- Net income $38.7 $36.5 $143.7 $123.9 ====== ======
======== ======== Diluted earnings per share $0.71 $0.70 $2.71
$2.39 ====== ====== ======== ======== Diluted shares outstanding
54.6 52.5 53.0 51.8 ====== ====== ======== ======== AMERICAN AXLE
& MANUFACTURING HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited) September 30, December 31, 2003 2002 --------
-------- (Unaudited) (In millions) ASSETS Current assets: Cash and
cash equivalents $14.3 $9.4 Accounts receivable, net 422.1 335.7
Inventories, net 156.5 174.6 Prepaid expenses and other 34.7 37.3
Deferred income taxes 11.1 9.1 -------- -------- Total current
assets 638.7 566.1 Property, plant and equipment, net 1,613.9
1,553.5 Deferred income taxes 5.3 10.9 Goodwill 150.2 150.2 Other
assets and deferred charges 50.4 55.0 -------- -------- Total
assets $2,458.5 $2,335.7 ======== ======== LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $363.1
$327.5 Other accrued expenses 219.2 207.7 -------- -------- Total
current liabilities 582.3 535.2 Long-term debt 572.8 734.1 Deferred
income taxes 76.4 52.0 Postretirement benefits and other long-term
liabilities 340.0 310.8 -------- -------- Total liabilities 1,571.5
1,632.1 Stockholders' equity 887.0 703.6 -------- -------- Total
liabilities and stockholders' equity $2,458.5 $2,335.7 ========
======== AMERICAN AXLE & MANUFACTURING HOLDINGS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months
ended Nine months ended September 30, September 30,
------------------ ----------------- 2003 2002 2003 2002 ------
------ ------ ------ (In millions) Operating activities Net income
$38.7 $36.5 $143.7 $123.9 Depreciation and amortization 40.6 38.1
121.0 104.4 Other 52.8 (31.0) 61.3 4.8 ------- ------- -------
------- Net cash flow provided by operating activities 132.1 43.6
326.0 233.1 Capital expenditures (62.5) (41.1) (172.9) (157.9)
------- ------- ------- ------- Net cash flow after capital
expenditures 69.6 2.5 153.1 75.2 Purchase buyouts of leased
equipment - (30.3) (3.0) (35.4) ------- ------- ------- ------- Net
cash flow provided by operations 69.6 (27.8) 150.1 39.8 Net
increase (decrease) in long-term debt (97.8) 28.9 (163.1) (55.9)
Employee stock option exercises 8.7 4.2 17.4 12.1 Effect of
exchange rate changes on cash - (0.7) 0.5 (1.2) ------- -------
------- ------- Net increase (decrease) in cash and cash
equivalents (19.5) 4.6 4.9 (5.2) Cash and cash equivalents at
beginning of period 33.8 2.5 9.4 12.3 ------- ------- -------
------- Cash and cash equivalents at end of period $14.3 $7.1 $14.3
$7.1 ======= ======= ======= ======= AMERICAN AXLE &
MANUFACTURING HOLDINGS, INC. SUPPLEMENTAL DATA (Unaudited) The
supplemental data presented below is a reconciliation of certain
financial measures which is intended to facilitate analysis of
American Axle & Manufacturing Holdings, Inc. business and
operating performance. Earnings before interest expense, income
taxes and depreciation and amortization (EBITDA)(a) Three months
ended Nine months ended September 30, September 30,
------------------ ----------------- 2003 2002 2003 2002 ------
------ ------ ------ (In millions) Net income $38.7 $36.5 $143.7
$123.9 Interest expense 11.3 13.3 36.2 37.4 Income taxes 20.8 20.6
77.3 69.7 Depreciation and amortization 40.6 38.1 121.0 104.4
------ ------ ------ ------ EBITDA $111.4 $108.5 $378.2 $335.4
====== ====== ====== ====== Net debt(b) to capital September 30,
December 31, ----------------- ------------ 2003 2002 2002 --------
--------- -------- (In millions, except percentages) Total debt
$572.8 $823.0 $734.1 Cash and cash equivalents 14.3 7.1 9.4
-------- --------- -------- Net debt at end of period 558.5 815.9
724.7 Stockholders' equity 887.0 692.4 703.6 -------- ---------
-------- Total invested capital at end of period $1,445.5 $1,508.3
$1,428.3 ======== ========= ======== Net debt to capital(c) 38.6%
54.1% 50.7% ======== ========= ======== (a) EBITDA is a non-GAAP
financial measure. The company believes that EBITDA is a meaningful
measure of performance as it is commonly utilized in the industry
to analyze operating performance, liquidity and entity valuation.
EBITDA should not be construed as income from operations, net
income or cash flow from operating activities as determined by
accounting principles generally accepted in the United States of
America. Other companies may calculate EBITDA differently. (b) Net
debt is equal to total debt less cash and cash equivalents. (c) Net
debt to capital is equal to net debt divided by the sum of
stockholders' equity and net debt. The company believes that net
debt to capital is a meaningful measure of performance as it is
commonly utilized to reflect relative capital structure risk. Other
companies may calculate this measure differently. AMERICAN AXLE
& MANUFACTURING HOLDINGS, INC. SUPPLEMENTAL DATA (CONTINUED)
(Unaudited) The supplemental data presented below is a
reconciliation of certain financial measures which is intended to
facilitate analysis of American Axle & Manufacturing Holdings,
Inc. business and operating performance. Free Cash Flow(d) Three
months ended Nine months ended September 30, September 30,
------------------ ----------------- 2003 2002 2003 2002 ------
------ ------ ------ (In millions) Net cash flow provided by
operating activities $132.1 $43.6 $326.0 $233.1 Capital
expenditures (62.5) (41.1) (172.9) (157.9) ------ ------ ------
------ Free Cash Flow $69.6 $2.5 $153.1 $75.2 ====== ====== ======
====== After-Tax Return on Invested Capital (ROIC)(e) Trailing
Quarter Ended Twelve --------------------------------------------
Months Ended December 31, March 31, June 30, September 30,
September 30, 2002 2003 2003 2003 2003 --------- ---------
--------- --------- --------- (In millions, except percentages) Net
income $52.2 $54.0 $51.0 $38.7 $195.9 After-tax net interest
expense (f) 8.8 8.1 7.8 7.3 32.0 --------- --------- ---------
--------- --------- After-tax return $61.0 $62.1 $58.8 $46.0 $227.9
========= ========= ========= ========= ========= Net debt at end
of period $558.5 Stockholder's equity at end of period 887.0
--------- Invested capital at end of period 1,445.5 Invested
capital at beginning of period 1,508.3 --------- Average invested
capital $1,476.9 ========= After-Tax ROIC 15.4% ========= (d) Free
cash flow is a non-GAAP financial measure. The company defines free
cash flow as net cash flow provided by operating activities less
capital expenditures. The company believes free cash flow is a
meaningful measure as it is commonly utilized in the industry to
assess a company's ability to repay debt and return capital to its
stockholders. Other companies may calculate free cash flow
differently. (e) ROIC is a non-GAAP financial measure. The company
believes that ROIC is a meaningful overall measure of business
performance because it reflects the company's earnings based on its
investment level. Other companies may calculate ROIC differently.
(f) After-tax net interest expense is calculated by tax effecting
the reported net interest expense by the effective income tax rate
for each presented quarter. DATASOURCE: American Axle &
Manufacturing Holdings, Inc. CONTACT: Media relations contact:
Carrie L.P. Gray, Director, Corporate Relations, +1-313-758-4880, ,
or Investor relations contact: Richard F. (Rick) Dauch, Vice
President, Investor Relations, +1-313-758-4767, , both of American
Axle & Manufacturing Holdings, Inc. Web site:
http://www.aam.com/ Company News On-Call:
http://www.prnewswire.com/comp/033813.html
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